Consumer Behavior and Building Marketing Strategy - Case Study Example

Consumer Behaviour Name Course Name and Code Instructor’s Name Date Table of Contents Table of Contents 2 Introduction 3 Household Life Cycle 4 Middle-aged married with children at home (full nest II) 6 Implication of full nest II on marketing strategy of family sized cars and single-sized food packaging 10 Family sized cars 11 Single-sized food packaging 11 Marketing Strategy 12 The 7 Ps marketing mix 12 Conclusion 14 References 16 Introduction The family is the basic social institution; it is the original avenue where individuals learn attitudes, values and behaviour that are essential in shaping their future personality (Calantone, Yeniyurt, Townsend and Schmidt, 2010). Traditionally, the family structure comprises of a married couple and children. Across the world, family and household growth patterns play a vital role in forming new trends in consumer behaviour. Studies have revealed that the growth in number, size and structure, and the age of the householder plays a significant role in purchasing and consumption behaviour. Household life cycle models are essential for marketing segmentation as they mark stages rather transitions related to definitive trends in expenditure for goods and services. The household life cycle concept comprises of the lifestyle, income and expenditure pattern differences that are brought about by family role tradition (Quester, et al., 2007). Additionally, household’s pattern of production, consumption, resource allocation and decision-making are also key determinants of economic behaviour. Studies have established that there are six stages of household life cycle based on demographic data; these stages are young single people; young couples with no children, young couples with youngest child under six years; couples with dependent children; older couples without children at home; and older single people. Each stage has its own characteristics with regard to purchasing patterns and financial circumstances. This paper seeks to discuss the changing trends in households and the implication of these changes on the marketing strategy. In this regard, the paper will explore the consumption behaviour of the middle-aged married with children at home (full nest II). Characteristics of this household life cycle stage in terms of income, social activities, purchasing habits, and housing will be discussed. Household Life Cycle The structure of the family and non-family households changes with regard to time. Family life cycle was designed to enable easy understanding of the structural differences in households over their life span (Calantone et al. 2010). The basic assumption by many researchers is that family life cycle undergoes a systematic progression through stages; each stage has its own characteristics with regard to financial situation and purchasing patterns (Quester, et al., 2007). Owing to the fact that a growing proportion of households are non-family households it is imperative to extent the concept of family life cycle to that of the household life cycle. Different household life cycle models have been developed by different researchers depending on the age and the marital status of the adults together with the presence of children. According to Quester et al (2007) household life cycle applies to both family and non-family households. In this regard, the assumption is that all persons go through a series of relatively distinct and definite stages as time passes. Consequently, there are various paths into these stages, and passage from one stage to another often occurs. For instance, it is more obvious for singles to get married and divorce without having children; one can become a single parent through divorce; and having a child without a cohabiting partner. However, the path to each stage defines rather influences family life. In this regard, a single parent family with a sibling under six years has similar characteristics in terms of consumption with another family with same profile. Further, every stage in the household life cycle exhibits different problems that household decision makers must solve. The selection and maintenance of lifestyle and product consumption is the only solution to these household problems (Quester, et al., 2007). It has been established that young married couples without children covet products that provide highest degree of relaxation and recreation. However, solutions to these desires differ; for example some couple go for outdoor activities thus tend to consume camping equipments and related products, while other opt for sophisticated urban lifestyle thus purchase tickets to theatre and opera. When these families integrate into the next stage of the household life cycle, their needs changes, for instance time and resource available for recreation and relaxation decreases as the needs to raise children become more urgent. Quester et al (2007) established that each household life cycle stage has its own unique needs and wants as well as financial condition and experiences. Owing to these facts, household life cycle give marketers’ homogeneous household segments that have similar needs with regard to household-related problems. These household stages include Young Single stage, young married with no children stage, Married with young children stage (full nest 1), young solo parent stage (Single parent 1), middle-aged single stage (single II), older married with young children stage (delayed full nest I), middle aged with children at home (full nest II), middle-aged single with children at home stage (single parent II), middle-aged married with no children stage (empty nest I), the older married couple stage (empty nest II), and the older single stage (single III) (Quester, et al., 2007). The above identified stages have different spending patterns; for instance according to the Australian Bureau of Statistics (2006), the proportional spending on housing generally falls over the life cycle, whereas proportional spending on food and non-alcoholic beverages tend to rise. The survey also established that Australian households spend approximately $893 per week on average on goods and services. The general spending across different stages primarily depended on the number of people in the household, income of the household, age, and the household life cycle stage. In this instance, older people aged 65 years and above spent $351 per week on average, on the other hand couples with one or more dependents children on weekly average spent approximately $1,537 per week (Australian Bureau of Statistics 2006). The Household Expenditure Survey of 2003-04 established that household representing younger life cycle stages proportionately spent more on current housing costs, while proportional spending on transport was high in households comprising of a couple with one or more dependent children. The proportional spending on food and non-alcoholic beverages was highest among older household couples (Australian Bureau of Statistics 2006). The differences in the spending patterns with regard to different household life cycle stages can be attributed to factors including income, housing costs, and number of members of the household. The following section will explore the spending and consumption behaviour of Middle-aged married with children at home stage. Middle-aged married with children at home (full nest II) This household life cycle stage comprises of people aged 35-64 years with children aged six years and above; these children are less dependent as compared to those of young married couples (Australian Bureau of Statistics 2006). For this matter, the fact that children are older and independent creates a new set of unique consumption needs. Children in this household life cycle are originally the consumers of a myriad of lessons including, piano, dance, and gymnastics; dental care; soft drinks; snack foods and pre-sweetened cereals (William & Gubar, 2002). Furthermore, there is a high demand for clothing, which integrates the general financial burden on the household. Consequently, there is greater demand for space thus the need for larger homes and family cars (Australian Bureau of Statistics 2006). The need to transport children to sporting events and practice places cause parents to spend hugely on petrol than any other household. Studies have also established that teenagers from these household life cycle stage present a major consumer segment. In this respect, many product brands are advertised in a manner that attracts the attention of this consumer segment, consequently such advertisements are scheduled and linked with programs targeting this group (William & Gubar, 2002). In this group as financial positions improves their priorities and preferences of purchase also improves; for instance, as aforementioned, the family spends more on food, clothes for children, education of children, insurance policies and investment. Consequently, they pay for medical expenses mainly dental treatment for children. This group also goes in for deals; they buy large sized packages and economy packs. This life cycle stage is also associated with junk food, fashion clothing and accessories, and video games are always on high demand. According to the Australian Bureau of Statistics (2006) established that if all factors remain constant, reducing the amount of mortgage principle on the family home decreases the mortgage interest rates which eventually lowers the proportional spending on current housing costs. The 2003-04 household expenditure survey established that only 9% of the current housing costs represented the total goods and services spending of households consisting of a married couple with one or more non-dependent children (Australian Bureau of Statistics 2006). The graph below shows the proportional spending by couples with non-dependant children only on households (William & Gubar, 2002). PROPORTIONAL SPENDING (a) BY COUPLES WITH NON-DEPENDANT CHILDREN ONLY HOUSEHOLD Australian Bureau of Statistics (2006) found that in 2003-04, 446,000 couples had non-dependant children that only relied on households. The average age of these couples was 57 years, and 53% of this group owned homes without mortgage. Additionally, couples that were repaying their mortgage were 38% while 8% were still renting their home (Australian Bureau of Statistics 2006). The average gross household income per week was established to be $1,739, which was slightly higher than of those couples with young dependent children only household. This high income is attributed to the number of income earners, age of members of household. The average household size was found to be 3.3 people with the average number of members aged 18-64 years was 2.3; the mean number of employed persons per household was 2.1 (Australian Bureau of Statistics 2006). According to the two surveys above, this life cycle stage, spending on transport was the largest broad group of goods and services. For instance in 2003-04, couples within this stage spend on average $237 per week on transport which is approximately 20% of their total spending on goods and services. This increased spending is attributed to a large number of pre-retirement age adults, and more employed persons in the household. Accordingly, independent children living with their parents are likely to purchase, operate and maintain a motor vehicle of their own to facilitate their travel to work, education and other social activities. Consequently, couples with non-dependent children only households proportionately spent highly on food and non-alcoholic beverages, recreation, tobacco products, personal care, medical care and health expenses. The main broad groups of goods and services that individuals in this life cycle stage spend more per person were medical care and health expenses which consumed approximately $19 per week followed by tobacco products approximately $7 per adult per week on average (Australian Bureau of Statistics 2006). Implication of full nest II on marketing strategy of family sized cars and single-sized food packaging From the above discussion, the full nest II stage there is an increase in the general household income and purchasing is at the peak thus making it an attractive segment for marketers. In this regard, marketers must identify who is the real customer to be targeted for a particular product. The full nest II stage comprises of multiple persons that can influence the purchase of any particular product and hence the decision process may be undertaken by different individuals. Owing to this fact, marketers must therefore understand who initiates, influences, decides, pays, and uses the product. Family sized cars Studies have revealed that children have less influence on the car buying decisions. With regard to this essential fact, it is imperative that the marketing strategy for family sized car should be such that it targets the parents rather than children (Fornell, Rust & Dekimpe, 2010). Consequently, it has also been established that at full nest II, individuals in this category are less influenced by advertisements and their purchases are somehow well planned and cautious (Del et al., 2004). The customer driven marketing strategy is the most appropriate strategy in this regard; the marketers need to design strategies that build the right relationship with the right customers. Owing to the Australian Bureau of Statistics (2006) the full nest II spend more on transport consisting of 20% of their total household expenditure. This means that their motor vehicle usage rate is high. The implication to marketers is that they should make sure that information with regard to family cars is readily available (Del et al., 2004). Consequently, they should make sure that there are various family sized car alternatives that consumers can choose from. As identified earlier, the purchasing decision of individuals in the full nets II stage is planned and highly cautious meaning that when making a purchasing decision, they undergo a full purchase decision making process. For instance, after problem recognizing, they search for information for solving the problem, evaluate the available alternatives, they make the product choice, and eventually there is a post purchase reaction. Single-sized food packaging According to Beevers (2004) children are becoming increasingly influential in family decision-making and pester power is moving a way beyond the supermarket trolley. He also established that over 20% of household children influence housing choices. Consequently, the Australian Bureau of Statistics (2006) found out that children in this household life cycle are originally the consumers of a myriad of lessons including, piano, dance, and gymnastics; dental care; soft drinks; snack foods and pre-sweetened cereals. Furthermore, they provide a large market for junk food. The marketing implication in this case if that, marketers can use single sized food packaging to target this market segment (Blythe, 2009). For instance, it has been established that latchkey kids are a potential market for home delivered junk food like pizzas and burgers. Marketing Strategy Target market strategy that is customer driven will work efficiently for marketers who target the full nest II. Given this fact, marketers need to design strategies that build the right relationship with the right customers (Calantone et al. 2010). Full nest II persons as described from the above are less influenced by advertisement and their purchase decisions are well planned, due to these facts the 7Ps marketing mix offers the full set of tools that are essential in satisfying the needs of target markets (Beevers, 2004). The 7Ps marketing mix has useful classifications that ensure that marketers respond to all areas that consumers make judgments with regard to any product. The 7 Ps marketing mix This is an integration of 4 Ps marketing mix to include people, process, and physical evidence in addition to Place, Price , product and promotion. In this regard, the 7 Ps Marketing mix comprises of Price, Place, Promotion, Product, People, Process, and Physical evidence. These factors will be discussed independently. Place: this refers to the specific place where customers can get rather buy products and how the products reach out to that place. Marketers can achieve this fundamental objective creating different channels through which products can be reached by the target consumers. For instance, the use of the internet, wholesalers, and retailers can play a vital role in this initiative (Beevers, 2004). For example marketing the Family size cars, marketers should provide vast and relevant information about these cars on the internet while also including the option of purchasing online. This mainly because full nest II stage individuals are cautious about any purchasing decision that prompts them to undergo the full cycle of the purchasing decision process (Blythe, 2009). Product: marketers must laud the fact that the products being marketed will add value to the general lifestyle of the target market. In the event of family size cars, they can enlarge the interior space designs to accommodate a large family (Medha, 2012). They should make consumers believe that the car will actually improve the way of life: for instance taking children to school and to other social events. Price: the prices must be competitive thus entailing a profit. For instance, marketers can include offers, and discounts to attract the target consumers. Promotion: this where marketers must come with various ways of communicating to the target customers of what they are really offering. Additionally it entails communicating the benefits of using a particular product or service rather than just talking about its features. They can accomplish this vital marketing role through advertisement through the internet, radio, television, magazines and newspapers (Medha, 2012). People: many researchers have established that customers make judgments and deliver perception basing on the manner in which employees interact with them (Neulinger and Simon, 2011). Owing to this fact, it essential for marketing staff to have high and appropriate interpersonal skills, aptititude and service knowledge in order to deliver the services that customers are paying for (Perez, Padgett & Burgers, 2011). This is specifically essential for single-sized food packaging that is delivered to children at home particularly delivered junk food like pizzas and burgers (Medha, 2012). Process: this refers to means used to assist the organization in delivering a specific service. As identified earlier, couples with non-dependent children only households proportionately spent highly on food and non-alcoholic beverages, recreation, tobacco products, personal care, medical care and health expenses (Medha, 2012). In this organizations offering this products and services must ensure efficiency and consistency in their businesses in order to retain this group. Physical evidence: this is the element of the service mix that allows customers to make judgment on the organization (Peattie & Peattie, 2009). For instance, when the customer walks into a restaurant, his or her expectations are of clean and friendly environment. Consequently, if one intent to travel using an aircraft in the first class cabin his or her expectations may include wide room with extensive comfort. In essence, consumers make perception basing on their sight of the service provision, which ultimately have a great impact on the organization’s perceptual plan of the service (Medha, 2012). Conclusion From the above discussion a family is the basic social institution; it is the original avenue where individuals learn attitudes, values and behaviour that are essential in shaping their future personality. Traditionally, the family structure comprises of a married couple and children. Researchers across the world, family and household growth patterns play a vital role in forming new trends in consumer behaviour. The growth in number, size and structure, and the age of the householder plays a significant role in purchasing and consumption behaviour. Household life cycle models are essential for marketing segmentation as they mark stages rather transitions related to definitive trends in expenditure for goods and services. The household life cycle concept comprises of the lifestyle, income and expenditure pattern differences that are brought about by family role tradition. Household life cycle applies to both family and non-family households. Household’s pattern of production, consumption, resource allocation and decision-making are also key determinants of economic behaviour. The proportional spending on housing generally falls over the life cycle, whereas proportional spending on food and non-alcoholic beverages tend to rise. References Assail H. (2004). 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